Pensioners hold £654bn of Home Equity in the UK

26-Aug-2009

Home equity among homeowners in England and Wales aged 65 and over amounts to £611 billion of equity, with a further £43bn held by pensioners in Scotland.  These figures come from Prudential's Equity Release Index, a report that tracks the amount of equity held in property by those aged 65 or above.  The report shows that older homeowners are now seeing gains in their property value as the housing market begins to show signs of stabilising, following two years of decline.

In Wales, the over-65s saw values rise by £3,448, followed by London's over-65s who gained £3,296, while in the West Midlands retired homeowners gained £2,789 and the North West saw increases of £818.  The Index showed that Scottish home equity is on a steeper increase than the rest of the UK, with a rise in value of 3.7 per cent, compared to a decrease of 0.03 per cent in England and Wales although the total value of property equity for the over-65s is still more than £3billion lower than it was a year ago.

The positive growth in house value in this age bracket is particularly good news for those planning to follow an equity release programme. Equity Release is a financial product whereby you can raise capital from the value of your property without having to move out of it.  Only available to those over a certain age (typically 55), equity release involves either taking out a loan that is secured against your property or selling all or part of the property and continuing to live there.  Either option would provide you with a cash lump sum that could be used to provide a steady retirement income, or in any other way you wish.

Keith Haggart, Director of Lifetime Mortgages at Prudential, said: "A good many pensioners will be cheered by the news that property values appear to be stabilising and in some parts of the country are even increasing.  This could bode very well for people considering using their home as an asset to boost retirement income.

"Of course falling property prices have affected every homeowner but it's important to remember that many homeowners now aged 65 and above bought their homes years ago and have benefited from longer term growth in the housing market.  Many people in this age group have lived in their home for twenty years or more.  The fall in house prices over the last couple of years appears to have slowed and, if house prices do rise in the future, the retired population could expect to see their wealth increase.

Haggart continued, "For many people, selling up and downsizing isn't an especially attractive option, and they don't want to face the emotional wrench of moving house.  Equity release has an important role to play in providing retirement funds particularly when other sources of income are under pressure."  In response to the recent housing market crash that left many in a state of negative equity, all Safe Income Home Plans (SHIP)-approved equity release providers offer a no-negative equity guarantee.  This ensures that no matter what happens to property values in the future, you would never experience additional costs if your property fell into negative equity nor would you lose the right to live in the property.

Equity release is a complicated financial product, and so we would highly recommend talking through your options with a qualified equity release adviser before proceeding with a lifetime mortgage or a home reversion plan.  If you would like to find out more about equity release or talk through your options with an experienced adviser, please fill out our short equity release form.  We will then put you in touch with an equity release specialist from the SimplyFinance network who will give you advice specific to your financial circumstances.